John Sculley: Steve Jobs Was Never Fired From Apple

By John Martellaro

Jan 13th, 2012 7:14 PM EST

David Greelish, computer historian with Classic Computing, recently had the opportunity to speak with with John Sculley, former Apple CEO (1983-1993) and discuss, in a great amount of detail, Mr. Sculley’s life and times at Apple. Mr. Greelish thinks that Mr. Sculley has taken a bad rap for firing Steve Jobs. That’s not what happened, and so here is the full story according to Mr. Sculley himself.

Editor’s note: The following interview took place during the last week of 2011. The complete, 80-minute audio interview is available in two audio files — Part 1 (43.1 MB) and Part 2 (37.3 MB) — but Mr. Greelish asked The Mac Observer if we would transcribe it for the record, with his full permission. What follows are the highlights of the interview, and we’ve also posted the entire written transcript, if you want to read every word.

David Greelish: Thank you very much for joining me today to conduct this interview. It’s my pleasure to speak with you, and as I told you before the interview, it’s my intention to mostly talk about you, and specifically your time running Apple Computer post-Steve Jobs…. I know you have publicly expressed heartfelt regret recently in regards to Steve Jobs and what mistakes you felt you made at Apple, but I have researched where you also led the company very successfully for many years. It’s not hard to simply look at the public record of Apple during your leadership and find growth, profitability, and innovation. So this is what I’d like to focus on.

Editor’s Note: At this point Mr. Greelish goes over John Sculley’s vast executive experience, all of which is in the full transcript.

And I thought all you ever did was fire Steve Jobs and ruin Apple! And I’m joking everyone, especially to you John. But John I want to lead off with that. It kinda can’t be helped but to talk about Steve Jobs a little bit, so you know this has come up a lot especially recently that you fired Steve Jobs, but isn’t that kind of a fallacy? You didn’t actually “fire”, quote, unquote Steve Jobs. Can you tell me what happened there?

John Sculley: Sure. Steve and I were partners and I was brought in to Apple to help run the company, together with him. I had no computer background when I was brought to Apple. I was brought to Apple because they needed someone who had the management experience first to help solve the problem that Apple had introduced the Apple III in 1982, and it had failed. The Apple ][ was near end-of-life, technically, Commodore outsold Apple ][ almost two-to-one, Atari outsold Apple more than two-to-one, the IBM PC had been introduced in 1981 and was rapidly catching to up the Apple ][ and was expected to pass it and clearly it was going to dominate business.

So the real issue that I was brought in to help with was to be able to use my marketing experience to keep the Apple ][ commercially successful for at least three more years to generate enough cash to give Steve Jobs the time to go and create Macintosh, and launch Macintosh successfully. So that was the first reason I was brought to Apple, and it didn’t take any particular computer experience to be able to do that. The way we approached it was it was a question of marketing and management and I recruited in a terrific executive, well known in Silicon Valley, Bill Campbell, who came in as our sales VP and he completely, you know, reenergized the dealer sales channel at that time. He took one of the key executives at Apple, named Del Yocam and put him in charge of the Apple ][ as a group. Ironically, because Steve was no longer interested in the Apple ][ even though he had created it.

DG: Right

JS: And even though Apple ][ was a cult product in itself, much like Macintosh became, that Steve looked at the Apple ][ group as the bozos, and he looked at the Macintosh as the elite talent team that was going to create the next great computer. And so, the Apple ][ group was actually not even physically located on the Apple campus. They were off in an entirely different part of Silicon Valley in a building called the Triangle Building. So the first thing I did when I joined Apple was to move my office over to the Triangle Building and became the titular head of the Apple ][ group. Because I wanted to give it some attention and then I used these two talented directors, Del Yocam who eventually moved from manufacturing to head up the Apple ][ group as the operational head and Bill Campbell, a terrific sales and marketing executive, and between us we were able to recraft the strategy for the Apple ][.

For those people who may remember the Apple ][, it ran on an operating system called Apple DOS, it used the 6502 processor, which was near end-of-life, but what was interesting to me as I was trying to understand how do people use the computer and what do they do with it, a couple of interesting facts came out. One was that most heavy users used it for spreadsheets and most of the people who used spreadsheets didn’t use the Apple operating system they put a [CP/M] card into the Apple ][ slots, and the CP/M had a different processor and different operating system on it and it became, not a different processor but a different operating system, and it became the way in which the Apple ][ was able to kind of stay up with the IBM PC in term of heavy lifting of spreadsheets. From a marketing standpoint, we wanted to find a differentiation for the Apple ][ and the Apple ][ is the first color computer, the reason why the Apple logo was multicolored back in those days, a multicolored apple with a bite out of it, was that it wanted to emphasize the fact that it actually had a color display, before anybody else did.

And so, as we were thinking about how do we differentiate the Apple ][ and make it exciting, we said lets focus on spreadsheets, lets add color graphics to the spreadsheet as the appeal that differentiates us and let’s create sales incentives for the sales channels to promote that particular solution. And let’s start designing new packaging for the industrial design of the Apple ][ that we later introduced a product called the Apple //c which was basically a repackaged Apple ][ and we were able to keep the Apple ][ extremely profitable, we started regaining market share, and it generated the cash flow that Steve needed to be able to create the Macintosh. So that was the first reason why I was brought in to Apple.

The second reason was that Steve Jobs believed that personal computers were eventually going to change the world in ways that would be every bit as important as any consumer product had ever been accepted by people. And therefore he said that we have to learn at Apple how to market personal computers the way that you, John, learned how to compete against Coke in the cola wars. Back in 1978, Pepsi actually passed Coca-Cola in the United States as the largest selling packaged good in America. And so Steve was really interested in how we accomplished that. He and I spent months together getting to know one another, probably almost five months. Weekends. I’d go to California, he’d come to New York, and so forth. And in those discussions, I was trying to teach him what I had learned at Pepsi about marketing.

One of the key insights we learned was that you don’t sell the product, you sell the experience. We did that with Pepsi Generation, and we did that in the early ‘70s with Pepsi Generation focused on baby boomers who were then young, and we did it when color television was first appearing, and large screen color television, meaning 21-inch screens were becoming the norm in the marketplace and we went to our ad agency, and they went to the best Hollywood directors with the instructions build lifestyle commercials that can appeal to the baby boomers with experiences that they can relate to. And we want you to do them as 60-second movies.

So Apple, no excuse me, Pepsi was the first company to do lifestyle marketing and that was called Pepsi Generation. So, the Pepsi Challenge was very much built on the same principles of experience marketing. … And Steve totally related to that. Because he said that’s how I think about computers. He said Macintosh is all about experience, it’s all about the user experience. We’re gonna deal with graphics, things that no one’s ever thought before in user interface, and we’re gonna make it incredibly approachable. And so, Steve and I were completely aligned in terms of what we were, what our roles were.

My role was to keep the Apple ][ successful and keep it generating cash and then help build the marketing campaign for not only Apple ][, but help Steve and his team with the marketing campaign to launch the Macintosh. In the meantime, Steve was focused on creating the Macintosh and so, the alignment of roles worked perfectly. Where things broke down was in 1985, the Macintosh office was Steve’s vision of what we later called desktop publishing. But the reality was that the technology just wasn’t powerful enough. The microprocessors were just too slow to be able to handle the heavy duty graphic geometries that had to be manipulated in order to do what we know today as desktop publishing, and then later desktop presentations.

The Macintosh office was introduced at the 1985 annual meeting and it came out with a lot of fanfare, but when it got out into the market it was a complete dud. Even though we had a laser printer, called the LaserWriter, and even though the Mac graphics were beautiful and what you saw on the screen was what you could print out, the reality was the system just wasn’t powerful enough to be practical for anybody. And so it got treated as a toy. It got highly criticized. And Steve became very discouraged and people stopped buying the Macintosh and the curiosity wore off. So the early excitement that everyone had around the creation of the 128K Mac quickly wore off with the Macintosh office.

As we moved out into March, the Macintosh sales were not doing well and Steve and I started to have major disagreements on what we should do about it. Steve wanted to lower the price of the Macintosh. And yet he still wanted to run substantial advertising behind the product. And he wanted to de-emphasize the Apple ][. I said look Steve, we’re a public company and we’ve set expectations in terms of our sales and our profits. The Mac just can’t deliver what you want it to be able to do yet, we have to continue to focus on the Apple ][, and we can’t afford to lower the price on the Macintosh and still put advertising behind it.

So, that was a major disagreement between us. I said if you try to change that on your own, then I have no choice but to go to the board, and we need to bring this issue up with the board. And he didn’t think I would do that. And I did. And so it was at the board level that, the board asked Mike Markkula, who was the third co-founder of Apple, was also vice-chairman of Apple, to go off and interview executives inside of Apple, all the key people, anybody he wanted to, and find out was John right or was Steve right.

Mike Markkula did that, took him about ten days to conduct this project. He came back, reported to the board, and his conclusion was that I was right. That the Macintosh just wasn’t ready to do the kinds of things that Steve wanted to do in terms of publishing. The processor technology just wasn’t there yet. He agreed that we had to keep the focus on the Apple ][, that we should leave the price alone if we wanted to continue to advertise the Macintosh at the level Steve wanted. So, Steve was very unhappy about that. The board asked him to step down from the role of leader of the Macintosh division. To be quite honest, I didn’t appreciate coming out of corporate America, because remember people get moved around all the time in corporate America, I didn’t appreciate what it meant to a founder, the creator of the Macintosh, to be asked to step down from the very division that he created to leave the very product that he believed was going to change the world.

So, I think because we came from such different experiences, mine from the East Coast in corporate America and Steve as a start up entrepreneur in Silicon Valley, I wasn’t as sensitive as I wish I had been on that. On the other hand, there was no question in my mind either then or later on, that we had no choice but to follow the business strategy, which we did. We continued to focus on the Apple ][ until the technology became powerful enough, which it later did by the way in 1986, when we could launch what we then renamed desktop publishing and it became wildly successful. It was a question of timing as much as anything.

So Steve was never actually “fired” from Apple, but he was demoted from the role of leading the Macintosh division and then he went off on sabbatical and then he eventually resigned from the company and took a number of key executives and started NeXT Computing. [Italics added.]

And the board was outraged, the outside board members, that he would do that, because he promised them that he wasn’t going to do that and then turned around and did it. So, that’s the actual facts. I think Walter Issacson delved into that in his book and talked to many different people on the Apple board, and actually corroborated that story.

DG: Yes, so this lines up perfectly with the research I’ve done and what I’ve read and heard, especially recently in leading up to our interview. But it’s everywhere, about you “fired” Steve Jobs, so I just though I’d cover that first.

JS: Look, can I just make an observation there?

DG: Sure. By all means.

JS: That when Steve left, I was a complete believer in all of Steve’s brilliant ideas. Remember, we were totally aligned as partners. You couldn’t have found two people who were, who trusted each other, enjoyed working with each other, could finish each other’s sentences than Steve and I during the times when things were going well between us. So, the breakup between Steve and me was incredibly painful for me, but it was also one where during the rest of my tenure at Apple, even though I was not a technologist, never pretended to be a technologist, that I believed in his first principles. And those principles were that we had to have proprietary technology because Apple was constantly making the tradeoffs between hardware and software. Because we were always trying to do things that the technology was just a little too early to be able to do in software alone. Or in hardware alone. So the first Mac 128K, people said “well, gee, why don’t you go license the operating system?” What most people don’t realize, that it wasn’t until Apple introduced System 7 (System 7 was an operating system release), that we actually had our first real operating system….

And so, I strongly believed, even though I wasn’t a computer engineer, that Apple should not license its technology, it should focus on building the absolute best products it could it should only do a few products at a time, and it should not compromise on anything, it should focus on user experience. And these weren’t my ideas, these were all Steve’s. So, during my tenure at Apple, we never changed any of those first principles Steve had. The reality was, I didn’t have the technical skills or the personal charisma to be able to lead Apple, technically, the way Steve could. So we had to parse that out to various individuals. It wasn’t one person making every decision the way Steve did so successfully.

The reality was that when Steve left Apple and started NeXT, he took those same principles and used them again with NeXT. And NeXT was a beautiful product from an industrial design standpoint. You know, it was a black cube. It had an incredible, talented team working on the operating system and graphics and things of that sort. But the end result was that there were certain things he couldn’t control. Just like he couldn’t control for, back in 1985, the fact that microprocessors weren’t powerful enough to do what later became desktop publishing. The Mac office failed. Steve could not control the fact that the things he was doing at NeXT were just too darned expensive. So he came out with a ten thousand dollar computer focused at education, and the reality was nobody wanted to buy a ten thousand dollar computer for education. So ironically, Steve applying those same principles, and sort of elevating it to try get even beyond Apple, failed.

The rest of the story is that Steve’s work with NeXT, again Moore’s Law, caught up to it. By the time he came back, I think in 1996 or 1997, the computers were powerful enough, the cost of technology had come down enough, that he was able to take all the work he did at NeXT, which failed in the late 1980s, and he was able to use that as the core for Apple’s recovery.

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The rest of the interview covers the Knowledge Navigator, the development of Bill Atkinson’s Hypercard, Apple’s Cray supercomputer, Larry Telser, the Newton, ARM, Marvin Minsky, and how Mr. Sculley came to leave Apple.